Explain Why Some Bond Investors Are Subject to Liquidity Risk,default

question 62

Essay

Explain why some bond investors are subject to liquidity risk,default risk,and/or taxability risk. How does each of these risks affect the yield of a bond?

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Definitions:

Labor Rate Variance

The difference between the actual cost of labor and the standard cost, calculated by subtracting the standard labor cost from the actual labor cost.

February

February is the second month of the year in the Gregorian calendar, known for having 28 days in common years and 29 days in leap years.

May

The fifth month of the year in the Gregorian calendar.

Labor Efficiency Variance

The difference between the actual labor hours used in production and the standard hours expected, multiplied by the standard labor rate.